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The Conference Board LEI for France increased sharply for a second consecutive month in January. Industrial new orders, the yield spread, production expectations, and building permits (residential) all made large positive contributions to the index this month. As a result, the six-month change in the index has picked up – to 3.4 percent (about a 6.9 percent annual rate), faster than the increase of 2.6 percent (about a 5.3 percent annual rate) between January and July 2010. In addition, the strengths among the leading indicators were more widespread than the weaknesses in recent months.

The Conference Board CEI for France, a measure of current economic activity, increased as well in January. Between July 2010 and January 2011, the coincident economic index increased 0.5 percent (about a 1.0 percent annual rate), slightly below the increase of 0.7 percent (about a 1.4 percent annual rate) during the previous six-month period. However, the strengths among the coincident indicators have been widespread in recent months. Meanwhile, real GDP increased at a 1.4 percent annual rate in the final quarter of 2010, following an increase of 1.0 percent annual rate in the third quarter.

The Conference Board LEI for France has been on a general upward trend since April 2009, and its six-month growth rate has picked up since fall 2010. Meanwhile, The Conference Board CEI for France has been on an increasing trend since reaching a trough in August 2009, amid widespread strength among its components. Taken together, the behavior of the composite indexes suggests that economic activity should continue to grow, and could even pick up further in the near term.

LEADING INDICATORS. Five of the seven components of the leading economic index increased in January. The positive contributors to the index— in order from the largest positive contributor to the smallest— are industrial new orders, the yield spread, production expectations, building permits (residential), and the stock price index. The negative contributors to the index— beginning with the larger negative contributor — are the inverted new unemployment claims and the ratio of the deflator of manufacturing value added to unit labor cost in manufacturing*.

With the increase of 0.9 percent in January, the leading economic index now stands at 113.0 (2004=100). Based on revised data, this index increased 0.9 percent in December and declined 0.2 percent in November. During the six-month span through January, the index increased 3.4 percent, and four of the seven components increased (diffusion index, six-month span equals 64.3 percent).

COINCIDENT INDICATORS. Three of the four components of the coincident economic index increased in January. The positive contributors to the index— in order from the largest positive contributor to the smallest— are industrial production, employment*, and wage and salaries*. Personal consumption* declined in January.

With the increase of 0.1 percent in January, the coincident economic index now stands at 104.4 (2004=100). Based on revised data, this index increased 0.1 percent in December and increased 0.3 percent in November. During the six-month period through January, the index increased 0.5 percent, with three of the four series making a positive contribution (diffusion index, six-month span equals 75.0 percent).

Prior to March 1994, the residential building permits component of The Conference Board LEI for France is calculated as permits granted minus permits cancelled. From March 1994 going forward, the permits granted series replaces residential building permits (an original component of the LEI) because of delays in the publication of permits cancelled data by the source agency. The impact on the LEI is negligible. If the missing series becomes available, the original definition of the housing permits series may be restored.

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THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING,
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Working Papers on The Conference Board Leading Economic Index® for the United States